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You are considering a risk-free investment that costs $7000 and pays $8500 in one year. You can either pay all cash for the investment or
You are considering a risk-free investment that costs $7000 and pays $8500 in one year.
You can either pay all cash for the investment or you can borrow part and pay cash for the other part. If you borrow $4000, you will be required to pay back $4240 in one year.
- The risk-free rate is 6%.
- What is the project's NPV? Is the NPV affected if you borrow some of the funds?
You are considering a risk-free investment that costs $7000 and pays $8500 in one year.
You can either pay all cash for the investment or you can borrow part and pay cash for the other part. If you borrow $4000, you will be required to pay back $4240 in one year.
- The risk-free rate is 6%.
- What is the project's NPV? Is the NPV affected if you borrow some of the funds?
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